The central banks agreed to lower the pricing on existing temporary US dollar liquidity swap arrangements, and to establish temporary bilateral liquidity swap arrangements, to boost liquidity. In the interview, at the Bloomberg Hedge Fund Summit, Bullard said:

"I'm happy to support the chairman in his effort to lower the penalty rate on these dollar swaps. I've certainly heard Jean-Claude Trichet say that these swaps were vital in the 2008 - 2009 period. And to the extent we're possibly coming into something like that again it is prudent to bolster our position there.

It is a penalty rate, you have to keep that in mind. I like the penalty rate because it chases European banks out of the dollar market, once funding returns to normal."

Bullard warned that there would be no "silver bullet" to solve Europe's problems and the governments. He said markets overplayed the idea of an ECB rescue for Europe, and that governments that had borrowed heavily, would take a long time to cut down their debt burdens and make their economies competitive again.

He also pointed to Europe as a "wake-up call", for the U.S. economy, but said he is "cautiously optimistic as long as the European situation doesn't melt down in a disorderly way." Bullard also said the Fed should wait and watch before embarking on any more easing.